Question 1

How are rational ignorance, special interest groups, and economic inefficiency related?

Accepted Answer

If the benefits of a piece of proposed l

Question 2

When a policy is highly visible, appears often in the newspapers, and has a major effect on the lives of millions of Americans, very often:

Accepted Answer

A)  special interests get their way. 
B)  voters get their way. 
C)  politicians get their way. 
D)  government gets its way. 
A)  special interests get their way. 
B)  voters get their way. 
C)  politicians get their way. 
D)  government gets its way.

Question 3

Why do you think voters choose to be rationally ignorant even when it is time to elect a new president? I. Voters are not presented with enough information to make a rational decision. II. Voters often believe that their vote does not make any difference in the political process. III. The process of understanding the electorate system, the candidates' platforms, and critically assessing the candidates' policies takes up more of the voter's time than it is worth.

Accepted Answer

A)  I only 
B)  II only 
C)  II and III only 
D)  I, II, and III 
A)  I only 
B)  II only 
C)  II and III only 
D)  I, II, and III

Question 4

As a predictive theory of politics the median voter theorem is applicable to almost all circumstances in politics.

Accepted Answer

A) True 
 B)False

Question 5

Saying that voters are rationally ignorant is the same as saying voters are irrational.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following provides the most reasonable explanation for why agricultural interests lobby for higher farm subsidies and price supports?

Accepted Answer

A)  Agricultural interests seek a redistribution of income favoring themselves. 
B)  Price support programs reduce food costs, which helps the poor. 
C)  Subsidies promote the efficient use of agricultural resources. 
D)  Without the farm subsidies, food shortages would result. 
A)  Agricultural interests seek a redistribution of income favoring themselves. 
B)  Price support programs reduce food costs, which helps the poor. 
C)  Subsidies promote the efficient use of agricultural resources. 
D)  Without the farm subsidies, food shortages would result.

Question 7

Suppose that a special interest group makes up 0.5 percent of the population. If a policy transfers $600 to the special interest at a cost of $100,000 to society, will the special interest group lobby for this policy?

Accepted Answer

A)  Yes, the benefits of $600 outweigh the costs of $500. 
B)  No, the benefits of $30 are less than the costs of $100,000. 
C)  No, the benefits of $30 are less than the costs of $50,000 
D)  They'll be indifferent since the benefits equal the costs. 
A)  Yes, the benefits of $600 outweigh the costs of $500. 
B)  No, the benefits of $30 are less than the costs of $100,000. 
C)  No, the benefits of $30 are less than the costs of $50,000 
D)  They'll be indifferent since the benefits equal the costs.

Question 8

Large special interest groups tend to favor less efficient policies because they make up a large fraction of society.

Accepted Answer

A) True 
 B)False

Question 9

If a policy transfers $100 to a special interest group at a cost of $4,000 to society, the group would lobby:

Accepted Answer

A)  for the policy no matter how large the special interest group is. 
B)  for the policy if the group made up more than 5 percent of the population. 
C)  for the policy if the group made up less than 1 percent of the population. 
D)  against the policy if the group made up less than 2 percent of the population. 
A)  for the policy no matter how large the special interest group is. 
B)  for the policy if the group made up more than 5 percent of the population. 
C)  for the policy if the group made up less than 1 percent of the population. 
D)  against the policy if the group made up less than 2 percent of the population.

Question 10

Reference: Ref 19-3 (Figure: Economic Freedom and Living Standards) Refer to the figure. Based on the data in this chart, two countries that have about the same level of economic freedom but very different standards of living are:

Accepted Answer

A)  Venezuela and Niger 
B)  Congo and Luxembourg 
C)  Haiti and Niger 
D)  Luxembourg and the United States 
A)  Venezuela and Niger 
B)  Congo and Luxembourg 
C)  Haiti and Niger 
D)  Luxembourg and the United States

Question 11

Sometimes it is rational to be ignorant.

Accepted Answer

A) True 
 B)False

Question 12

Explain the assumptions behind the median voter theorem. In which cases will the median voter theorem NOT apply?

Accepted Answer

The median voter theorem is constructed

Question 13

Politicians have a greater interest in serving the voters' will when:

Accepted Answer

A)  voters are well-informed. 
B)  special interest groups are nonexistent. 
C)  the media does not get involved. 
D)  the policy is highly visible. 
A)  voters are well-informed. 
B)  special interest groups are nonexistent. 
C)  the media does not get involved. 
D)  the policy is highly visible.

Question 14

Rational ignorance can be seen in which of the following scenarios?

Accepted Answer

A)  A student has a final exam in exactly three hours. He knows from past experience that without at least some sleep he will be useless on the exam. In spite of the fact that he still has four chapters to read for the exam, he decides to sleep for 2.5 hours. 
B)  You are a worker looking for work in a recessionary environment. You get a phone interview after which you are offered a job and have to start the next day. To secure a paycheck, you accept without doing any further research on the company. 
C)  You have to fly urgently. You buy the first ticket available and it is expensive, but you pay anyway because you do not have time to research other flights. 
D)  All of these examples illustrate cases of rational ignorance. 
A)  A student has a final exam in exactly three hours. He knows from past experience that without at least some sleep he will be useless on the exam. In spite of the fact that he still has four chapters to read for the exam, he decides to sleep for 2.5 hours. 
B)  You are a worker looking for work in a recessionary environment. You get a phone interview after which you are offered a job and have to start the next day. To secure a paycheck, you accept without doing any further research on the company. 
C)  You have to fly urgently. You buy the first ticket available and it is expensive, but you pay anyway because you do not have time to research other flights. 
D)  All of these examples illustrate cases of rational ignorance.

Question 15

Suppose you are in the middle of your senior year at school. An election comes up for the new student representatives to the school senate. The candidates are mostly sophomores. If elected these students will have powerful votes in the senate on matters that affect the student body. Do you have an incentive to be rationally informed?

Accepted Answer

Chances are that you will remain rationa

Question 16

Rational ignorance may cause voters to make irrational decisions, such as judging a politician based on the level of oil prices, even though markets set oil prices.

Accepted Answer

A) True 
 B)False

Question 17

The greater the share of the population that is brought into political power, the more likely it is that policies will favor economic growth.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would be the most likely outcome if a college professor awards grades based on average test scores and assigns the same grade to everyone in the class?

Accepted Answer

A)  Students will collaborate to get a better grade and achieve higher payoff. 
B)  Students will study more because studying has a higher payoff. 
C)  Students will study less because studying has a lower payoff. 
D)  Students will study the same amount as they did before because their scores will still impact the average score. 
A)  Students will collaborate to get a better grade and achieve higher payoff. 
B)  Students will study more because studying has a higher payoff. 
C)  Students will study less because studying has a lower payoff. 
D)  Students will study the same amount as they did before because their scores will still impact the average score.

Question 19

Studying politics doesn't pay because the outcome:

Accepted Answer

A)  of any election is mostly determined by what other people do, not by what you do. 
B)  of any election is mostly determined by what you do, not by what other people do. 
C)  is always inconsistent with the expectation. 
D)  can be manipulated by politicians. 
A)  of any election is mostly determined by what other people do, not by what you do. 
B)  of any election is mostly determined by what you do, not by what other people do. 
C)  is always inconsistent with the expectation. 
D)  can be manipulated by politicians.

Question 20

Sugar producers likely won't do much to oppose a law that reduces the supply of sugar and raises prices.

Accepted Answer

A) True 
 B)False

Exam 19: Public Goods and the Tragedy of the Commons

How are rational ignorance, special interest groups, and economic inefficiency related?

When a policy is highly visible, appears often in the newspapers, and has a major effect on the lives of millions of Americans, very often:

As a predictive theory of politics the median voter theorem is applicable to almost all circumstances in politics.

Saying that voters are rationally ignorant is the same as saying voters are irrational.

Which of the following provides the most reasonable explanation for why agricultural interests lobby for higher farm subsidies and price supports?

Suppose that a special interest group makes up 0.5 percent of the population. If a policy transfers $600 to the special interest at a cost of $100,000 to society, will the special interest group lobby for this policy?

Large special interest groups tend to favor less efficient policies because they make up a large fraction of society.

If a policy transfers $100 to a special interest group at a cost of $4,000 to society, the group would lobby:

Reference: Ref 19-3 (Figure: Economic Freedom and Living Standards) Refer to the figure. Based on the data in this chart, two countries that have about the same level of economic freedom but very different standards of living are:

Sometimes it is rational to be ignorant.

Explain the assumptions behind the median voter theorem. In which cases will the median voter theorem NOT apply?

Politicians have a greater interest in serving the voters' will when:

Rational ignorance can be seen in which of the following scenarios?

Rational ignorance may cause voters to make irrational decisions, such as judging a politician based on the level of oil prices, even though markets set oil prices.

The greater the share of the population that is brought into political power, the more likely it is that policies will favor economic growth.

Which of the following would be the most likely outcome if a college professor awards grades based on average test scores and assigns the same grade to everyone in the class?

Studying politics doesn't pay because the outcome:

Sugar producers likely won't do much to oppose a law that reduces the supply of sugar and raises prices.

The Big Ideas in Economics

The Power of Trade and Comparative Advantage

Business Fluctuations: Aggregate Demand and Supply

Equilibrium: How Supply and Demand Determine Prices

Elasticity and Its Applications

Taxes and Subsidies

The Price System: Signals, Speculation, and Prediction

Price Ceilings and Floors

International Trade

Externalities: When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination and Pricing Strategy

Oligopoly and Game Theory

Competing for Monopoly: the Economics of Network Goods

Monopolistic Competition and Advertising

Labor Markets

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Asymmetric Information: Moral Hazard and Adverse Selection

Consumer Choice

Gdp and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth, Capital Accumulation, and the Economics of Ideas: Catching up Vs the Cutting Edge

Saving, Investment, and the Financial System

Supply and Demand

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Transmission and Amplification Mechanisms

The Federal Reserve System and Open Market Operations

Monetary Policy

The Federal Budget: Taxes and Spending

Filters